Correlation Between Brown Forman and GWILLI FOOD

Can any of the company-specific risk be diversified away by investing in both Brown Forman and GWILLI FOOD at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Brown Forman and GWILLI FOOD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brown Forman and GWILLI FOOD, you can compare the effects of market volatilities on Brown Forman and GWILLI FOOD and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Brown Forman with a short position of GWILLI FOOD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Forman and GWILLI FOOD.

Diversification Opportunities for Brown Forman and GWILLI FOOD

-0.36

Correlation Coefficient

Brown Forman  GWILLI FOOD

Very good diversification

The 3 months correlation between Brown and GWILLI is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Brown Forman and GWILLI FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GWILLI FOOD and Brown Forman is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Brown Forman are associated (or correlated) with GWILLI FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GWILLI FOOD has no effect on the direction of Brown Forman i.e., Brown Forman and GWILLI FOOD go up and down completely randomly.

Pair Corralation between Brown Forman and GWILLI FOOD

Assuming the 90 days trading horizon Brown Forman is expected to under-perform the GWILLI FOOD. In addition to that, Brown Forman is 1.37 times more volatile than GWILLI FOOD. It trades about -0.41 of its total potential returns per unit of risk. GWILLI FOOD is currently generating about 0.13 per unit of volatility. If you would invest  1,510  in GWILLI FOOD on October 11, 2024 and sell it today you would earn a total of  60.00  from holding GWILLI FOOD or generate 3.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Brown Forman  vs.  GWILLI FOOD

Brown Forman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brown Forman has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GWILLI FOOD

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GWILLI FOOD are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, GWILLI FOOD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brown Forman and GWILLI FOOD

The main advantage of trading using opposite Brown Forman and GWILLI FOOD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brown Forman position performs unexpectedly, GWILLI FOOD can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in GWILLI FOOD will offset losses from the drop in GWILLI FOOD's long position.

The idea behind Brown Forman and GWILLI FOOD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.